The American division of legendary game developer Atari has filed for bankruptcy.

Atari bankrupt

Atari Inc. has petitioned for Chapter 11 Reorganisation at the US Bankruptcy Court in New York. The company hopes to separate itself from Atari's French parent company Atari S.A., which, according to the Los Angeles Times, has seen its revenues drop by 34 percent during the 2012 fiscal year. Shares in Atari S.A., formerly called Infogrames, have fallen from €8 (£6.71) in 2011 to less than €1 in 2013.

Atari Inc. was formerly reliant on London investment group BlueBay for its capital, but its $28 million credit lapsed on 31 December, leaving it without the money to release upcoming real money gambling game Atari Casino

Citing a "knowledgeable person not authorised to discuss the matter privately" the LA Times said that Atari Inc. is now looking to sustain a smaller, private business that will create mobile and digital games. Under Chapter 11 bankruptcy, the company has acquired $5.25 million in debtor-in-possession financing that will allow it to retain its property and continue operating until a suitable financier is found.

Founded in 1972, Atari is famous for spearheading the rise of videogame arcades in the 1970s with games like Pong and Centipede. It also released several machines as part of the first wave of home consoles, including the Atari 5200 and the Atari Video Computer System.

However, the company faced on-going financial difficulties during the early eighties and was eventually divided into separate divisions following the 1983 game industry crash. After its various divisions were sold to separate investors, including rival arcade developer Namco, Atari continued to operate as a hardware developer, releasing the Atari Lynx handheld system in 1989 and the 64 bit Jaguar in in 1993. Both machines sold poorly and in 1998 Atari Corporation was bought by board game maker Hasbro, which was in turn purchased by Infogrames.

According to the LA Times, a large portion of Atari's revenue (around 17 percent) is now generated from consumer products that carry the company's logo.

No potential purchasers of Atari Inc. have been named.